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Access to markets and the benefits of rural roads, Volume 1
Author:Jacoby, Hanan G.; Country:Nepal;
Date Stored:2000/02/24Document Date:1998/12/31
Document Type:Policy Research Working PaperSubTopics:Labor Policies; Economic Theory & Research; Environmental Economics & Policies; Health Economics & Finance; Banks & Banking Reform; Roads & Highways
Language:EnglishMajor Sector:Transportation
Region:South AsiaReport Number:WPS2028
Sub Sectors:Rural RoadsCollection Title:Policy, Research working paper ; no. WPS 2028
Volume No:1  

Summary: Transport infrastructure plays a central role in rural development, yet little is known about the size - or, especially, the distribution - of benefits from road investments. Among other benefits, rural roads provide cheaper access to both markets for agricultural output and for modern inputs. The author develops and implements a method for nonparametrically estimating the benefits from road projects at the household level. The idea is that since these benefits get capitalized in land values, they can be estimated by examining how the value of farmland falls with distance from agricultural markets. Household-level benefits from hypothetical road projects are calculated from the predicted appreciation in value of the household's farmland. These predicted benefits are then related to household per-capita expenditures to assess their distributional consequences. The empirical analysis, using data from Nepal, shows large benefits from extending roads into remote rural areas, much of these gains going to poorer households. But rural road construction is not the magic bullet for poverty alleviation. The benefits are neither large enough nor targeted well enough to reduce income inequality appreciably.

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